An Appetite for Acquisition

Currently focused on converting a shuttered ethanol facility into a pellet plant, Northeast Wood Products is well on its way to reaching its five-year goal of 1.5 million tons of annual capacity.
By Anna Simet | November 23, 2015

In 2014, the Mohegan Tribe of Connecticut jumped into the U.S. wood pellet market with an aggressive series of acquisitions, first purchasing Pennington Seed Co.’s 65,000-metric-ton pellet plant in Peebles, Ohio, and shortly thereafter, its 65,000-metric-ton-per-year pellet plant in Ligonier, Indiana. In addition, Northeast Wood Products—the resulting subsidiary—purchased some equipment and assets at Pennington’s Kenbridge, Virginia, facility, as well as some pellet manufacturing machines from Anderson Hardwood in Louisville, Kentucky.

Just months after these acquisitions, NWP picked up a shuttered ethanol plant in Jasper, Tennessee, with plans to convert the site into a pellet production facility. While the company’s strategy has been aimed at diversifying the tribe’s revenue while capitalizing on a seemingly booming industry, it has also been to squeeze maximum value out of each transaction by recovering, revamping and converting existing assets.

Perhaps the most standout purchase to date has been the Jasper facility, a site previously owned by Tennol Ethanol. “The plant was shuttered in the early ‘80s,” says Guy Mozzicato, president of NWP. Mozzicato, an entrepreneur who has held executive positions in a broad range of public and privately held businesses, took the reins as president of NWP upon its conception, and has played a lead role in forging the young company full steam ahead.

The Jasper property is in excess of 230 acres, Mazzicato says—an excessive amount of land for just one tenant—so at this point, the site is shared between NWP and existing tenant Carbellus, a company that manufactures industrial products including tractor tire ballast fluids, acid oils, yellow greases, and biodiesel feedstock. “We’re on a little over five acres there,” Mozzicato says. “The biofuel folks beside us have a lab in their building, and we’ll comingle there.“

Prior to Carbellus moving in, the site changed hands several times over the years, its purchasers seeing little success. Tennol built the $72 million, 25 MMgy ethanol plant in 1984, but didn’t fare well in producing fuel and filed for bankruptcy four years later. After another company purchased the facility from the U.S. DOE for a fraction of its value in 1994, it, too, went bankrupt. The site was then acquired by a bank and eyed by numerous companies over the years, until Carbellus bought it in 2009. NWP purchased its space at the site in 2014, and with an eye for opportunity, the company is reaping the benefits of numerous existing assets and infrastructure.

Advantageous Assets
With existing scales, fenced-in property, paved roads, buildings and silos, the original infrastructure lends itself well to a pellet manufacturing operation. “We originally intended to use the existing silos to store fiber, but we opted to build a separate building adjoining the pellet building,” Mozzicato says. “All of the conveyors were in place, and some we reactivated, but for most part we replaced with new.”

 With 40 rail cars on site, property abutting the Tennessee River, and 2,500 feet preapproved for dock and barge siting, Mozzicato points to the potential the facility holds moving forward. “We have 10,000 tons of bulk storage onsite for unfinished product, and we have existing silos that would hold an additional 10,000 tons, but we’re not utilizing those in the first phase of the project,” he says. “We envision coming out of the box by the end of this year at 120,000 or 125,000 tons of production, then in phase two next year with a similar additional throughput.”

Initial operations will begin with dry fiber production, but phase two will include bringing in a dryer. “When we installed the machinery, we brought in electricity amperage for a second line—all expansions are in place, and they’re constructed to drop a second machine right next to the one we have,” Mozzicato says. “We’ve also built an R&D center there, fully separate of the pellet lines we have installed, given we had the extra space and the building for it. It’s complete with screens, hammer mills and a dryer, so we can test various fiber sources for a number of different products we could produce in this facility, or other facilities we see in the future.”

The site is also located near flooring manufacturers, sawmills and Southeast wood baskets, convenient for sourcing and transporting feedstock.

Mozzicato declined to disclose the estimated savings by acquiring an existing site rather than a green field site, but says, “It makes a lot of sense, if you can utilize a shuttered facility, and some of the infrastructure is sound and manageable…we’ve actually had very little challenges, the project has unfolded nearly exactly as planned.”

While NWP’s Peebles and Ligonier facilities are now in full production, each putting out approximately 65,000 tons of the Thermaglo brand pellets annually, Mozzicato says that besides its focus on the domestic heating market, the company is looking at expanding into other areas aside from heating pellets, possible briquettes, fire logs or barbeque pellets.

It won’t be long before NWP makes its next move, he adds. “We have options on additional properties, are working on other opportunities, and our intention is to continue to expand.”

Author: Anna Simet
Managing Editor, Biomass Magazine
[email protected]